Until now, the mHealth industry has experienced relatively few patent infringement conflicts, and little or no litigation instituted by non-practicing entities. But these trends may be disrupted within the next few years. Companies in the medical device, computer, networking, and communications industries are all patenting in the mHealth space, and the likely result will be a thicket of overlapping patents on mHealth products and their components. As the patent thicket grows, patent infringement conflicts likely will increase—especially as mHealth technologies mature and winners within the industry emerge.

To help you navigate the patent thicket, this article discusses the current patent landscape in the mHealth industry and concludes with recommendations that mHealth companies could pursue to manage their intellectual property more effectively and reduce patent infringement risk.

Summary of Findings

The number of mHealth patents issued by the Patent Office has increased steadily since 2000 (when the number of mHealth patent applications was negligible), and will continue to surge until at least 2014.

Large companies are winning the mHealth patent race by obtaining the vast majority of newly-issued mHealth patents.

Intellectual Ventures, a non-practicing patent aggregator, is patenting aggressively in the mHealth space. Licensing demands and litigation from IV (and possibly other NPEs) are sure to follow.

Almost half of the top twenty mHealth patent holders are not mHealth companies, or even medical device developers.

The incidence of mHealth patent infringement conflicts likely will increase as companies become more profitable and patent portfolios mature. To manage patent infringement risk, companies should consider the following options:

If you have never been sued, consider purchasing insurance;

Properly structure IP indemnification rights and obligations;

Build-out your patent portfolio—even ancillary improvements in the mHealth space may become critical if they are widely adopted by your competitors;

Robert Bosch Healthcare filed lawsuits against ExpressMD, MedApps, Waldo Health, and Cardiocom; and

BodyMedia filed a lawsuit against Basis Science.

The volume of patent litigation in the mHealth industry is low relative to related industries such as the computer, smartphone, and medical device industries. The following factors likely play a role in damping the amount of patent litigation in the mHealth industry:

The difficult funding environment and poor economy make the expense of litigation unpalatable;

The industry is rapidly evolving and it is unclear which technologies and solutions will be profitable “winners”; and

Many companies are still in the process of building their patent portfolios.

The influence of these factors will wane as the economy stabilizes, the mHealth industry matures, and companies obtain more patents on mHealth technologies. Some mHealth companies are already becoming more aggressive about defending their intellectual property rights.

For example, AirStrip, a company that offers a mobile patient monitoring platform, announced in September 2012 that it obtained a patent (U.S. Patent No. 8,255,238) on technology for sending and displaying physiologic data on a mobile device. In an interview with MobiHealthNews, AirStrip’s President and Chief Medical Officer, Dr. Cameron Powell, claimed that his company’s patents cover “taking any type of physiologic data—whether that’s from a sensor in the shoe, a home monitor, a blood pressure cuff, or a monitor in the hospital—and then re-rendering it on a native or HTML5 application on a mobile device.” At the time, Powell noted that, “[t]he message here to the industry is not that we are issuing this press release to stop every company out there who is doing this, [but], who knows, there may be a few fringe players who we have an issue with.” More recently, on October 18, 2012, AirStrip filed a lawsuit against mVisum, Inc. in the Southern District of New York alleging that mVisum’s CCS, Live Stream, OB, and onDemand products infringe AirStrip’s ‘238 patent. As is typical in such lawsuits, AirStrip’s Complaint requests an injunction barring future infringement, treble damages, and attorneys’ fees.

Similarly, after filing several lawsuits against competitors in the home health monitoring field, Robert Bosch Healthcare’s spokeswoman declared that “[w]e feel it is important to demonstrate that IP is important, and not just to our company. Bosch Healthcare Systems, like most high-tech companies, values its intellectual property as an essential asset of its business. Bosch is open to working with those companies that are interested in securing this technology through a licensing agreement, and we are in discussion with numerous companies in this regard.”

Patent owners in many industries tout their patent rights and use their patents to attack alleged infringers. AirStrip’s and Robert Bosch Healthcare’s actions are notable because they seem to indicate that mHealth companies are becoming more assertive about their patent rights. Loudly advertising patent rights and filing patent infringement lawsuits tends to create insecurities in competitors that may spark patent arms races or precipitate business disputes that result in additional litigation.

Statistics On mHealth Patenting Activity

The sections that follow summarize some key aspects of patenting activity associated with the mHealth industry. Before discussing the numbers, it is important to understand the methodologies I used in my research, to help you understand some inherent limitations in the data I collected.

There is no agreed definition of mHealth, and no government or private sector entity (that I am aware of) which tracks mHealth patents. Categorizing mHealth patents one at a time would take years, so I resorted to key word searching several comprehensive patent databases to collect information about mHealth patents. I believe that patents covering component parts of mHealth products can be as important to mHealth companies as patents covering entire mHealth products, so I used relatively broad search strings in my research. I performed full text key word searches using the following search string: (health or “health care” or healthcare or medical) and (wireless or WiFi). I am sure that the keywords I selected were both over-inclusive and under-inclusive, so you should not treat the charts below as objective data on the absolute number of mHealth patents and applications in the system. Rather, focus on the trends revealed by the charts, which are very instructive and less likely to mislead.

mHealth Companies are Investing Heavily in Patent Protection and Large Numbers of Patents Will Issue in the Next Few Years

The chart immediately below provides a rough estimate of the volume of patent applications related to mHealth filed in the United States each year. Thousands of patent applications related to mHealth are being filed each year, and the number of applications has increased steadily since 2000. The Patent Office’s historical grant rate is slightly above 50 percent, and the average pendency for a patent application is about three years. In other words, the large number of patent applications that were filed between 2008 and 2011 will soon begin issuing as patents.

The next chart provides a rough estimate of the number of patents related to mHealth that issued since 2000. Issuance of new patents spiked in 2010, approximately two years after the surge in mHealth-related patent applications. The spike in new patents will continue into 2013 and 2014, as the Patent Office finishes processing the slew of applications filed in 2010 and 2011.

Considering the number of pending and issued patents that relate to mHealth, it is likely that the mHealth industry will soon find itself in a patent thicket, in which many different patent owners hold blocking patents on widely-adopted, essential technologies. Patent thickets tend to increase the cost of doing business for established companies (money losing start-ups are rarely sued for patent infringement).

The Poor Economy and Tight Funding Environment are Hampering Small Entities’ Patenting Efforts, and Large Companies are Capturing the Majority of the mHealth IP Frontier

The two charts below indicate that large companies are capturing the vast majority of intellectual property related to mHealth. It is likely that large companies’ research, development, and patent budgets were less impacted by the sour economy than smaller companies’ budgets. The likely result of this funding disparity is that large companies are probably capturing most of the foundational mHealth patents granted by the Patent Office.

The Appearance of Non-Practicing Entities Signals that Patent Monetization Will Bedevil mHealth Providers

One large patent holder in the mHealth space is Nathan Myhrvold’s Intellectual Ventures (“IV”) Invention Science Fund I, which owns several hundred patents. IV is a non-practicing entity (NPE) patent aggregator that purchases patent portfolios and files additional, continuation patent applications to extend the portfolios to cover IV’s key licensing targets. IV is notorious for attempting to “cover” an industry with patents. Once it does so, it demands hefty license fees for the use of its intellectual property.

When IV was founded, it proclaimed that it would not file lawsuits to enforce its patents. More recently, IV dispensed with that policy and began initiating lawsuits to compel alleged infringers to purchase licenses to its portfolio. In addition to filing its own patent infringement lawsuits, IV sells patents to third parties for enforcement, or partners with third-parties who enforce the patents and return a share of litigation proceeds to IV.

IV’s presence in the mHealth marketplace signals that mHealth companies will have to contend with NPE lawsuits. NPEs typically focus on profitable companies, so mHealth start-ups should be able to avoid NPE lawsuits—at least while their revenues are low and they remain unprofitable.

NPE lawsuits are not only the result of patent acquisitions by aggregators like Intellectual Ventures. Companies from the computer, medical device, networking, and communications industries are pursuing technologies relevant to mHealth and they are investing massive amounts of money to patent their inventions. Many companies who obtain patents related to mHealth will fail, and when they do, some founders and investors will attempt to recoup their investments by selling patents to patent aggregators like IV, or by enforcing the patents themselves. Failed companies are not vulnerable to patent infringement counterclaims, so investors and founders often become more aggressive about enforcing patents after a company ceases operations.

Another notable mHealth patent trend is that almost half of the top twenty patent holders identified in my research are not pure-play mHealth companies, or even medical device makers. Microsoft, IBM, Intel, Cisco, HP, Broadcom, Honeywell, Nokia, Motorola, and Sony each own hundreds of patents on technologies that relate to mHealth. This convergence of competitors from other industries is simultaneously spurring innovation and growth in the mHealth field and creating barriers to entry for some mHealth start-ups. On the other hand, mHealth companies can benefit from the presence of these technology behemoths’ participation in the mHealth space by using commodity components (e.g., cellular components from Nokia or operating system software from Microsoft) in their products. Purchasing components keeps prices down, and may, as a practical matter, provide mHealth companies some protection from these players’ patents. Large companies like Microsoft and Nokia also tend to be more reliable about indemnifying their customers if components in customers’ products are accused of infringement.

Observations and Recommendations

The information I collected about the mHealth patent landscape reveals four major trends:

Big companies are winning the patent race and capturing the majority of the IP

The mHealth intellectual property frontier is closing rapidly (or already may be closed) to companies who seek foundational mHealth patents

As mHealth patent holdings increase, barriers to enter the mHealth industry also will generally increase

If current trends continue, companies in the mHealth industry will eventually find themselves in a patent thicket, in which non-practicing entities are more aggressive about demanding license revenues, and competitor patent infringement lawsuits are much more prevalent than they are today.

To help safeguard their interests as the mHealth patent landscape grows more treacherous, mHealth companies should consider the following options for strengthening their patent rights and decreasing patent infringement risk:

Insurance: If your company is small and has never been sued for patent infringement, you can obtain a patent infringement policy for a relatively modest sum. Insurance will help ensure that your business is not derailed by an infringement lawsuit.

Carefully Manage Indemnification Rights and Obligations: Pay careful attention to your business relationships, and ensure that you are properly indemnified by your suppliers, and that you are not unwise about the scope of indemnification that you offer your partners and customers.

Rapidly Build-Out Your Patent Portfolio: Your patenting strategy should cover key innovations and product differentiators. But do not overlook ancillary improvements, which could become critical to your company if they are widely adopted by your competitors. If you have key mHealth inventions ready for patenting, it may be worthwhile to speed the issuance of those patents using the Patent Office’s Track 1 process.

Streamline Your Internal Invention Disclosure, Review, and Filing Process: In early 2013, the United States patent system will convert from a “first to invent” to a “first inventor to file” system. The new system rewards inventors who file patent applications as early as possible—and bars others’ later-filed applications. The importance of filing patent applications early is even greater in a new field like mHealth, where the technology frontier is still open. Also consider accelerating the examination of key patent applications using the USPTO’s Track 1 process.

Proactively Monitor Competitors’ Patenting Activities: In a crowded and fast growing field, it is especially important to gather competitive, timely intelligence about competitors’ applications and patents. Here’s why:

The recently-enacted America Invents Act allows companies to make pre-issuance submissions of prior art during prosecution of competitors’ patents, which may improve the quality of the patent examination process and help ensure that competitors do not obtain overly-broad patent claims. Pre-issuance submissions may only be made during brief windows during the patent examination process.

The America Invents Act established a post-grant review process that allows companies to challenge the patentability of competitors’ newly-issued patents on nearly any ground of patentability (this is a major change from previous patent reexamination procedures). But post-grant review is only available during the first nine months after patent issuance (with some exceptions, post-grant review is only available for “first inventor to file” patents).

The America Invents Acts establishes new “derivation proceedings” to allow companies to recover an invention that was stolen and separately patented. But a derivation proceeding can only be initiated within the first year after a “first inventor to file” patent issues.

Proactively Cross-License Patents: Many companies would be better-off if they cross-licensed their patents with other key IP owners. When cross-licenses are structured properly, they can decrease or eliminate litigation, expand freedom to operate, and hasten market acceptance of new technologies. Another strategy for reducing infringement risk is to use licensed components from a large patent holder or from companies who have obtained key cross-licenses.

If Your Company Does Not Own Any Patents, Reevaluate Your Strategy: Small companies often forego patent protection because the patenting process is expensive. Sometimes, foregoing patent rights is a wise business decision. There are significant trade-offs associated with allocating funds to patenting rather than sales or marketing. But over the long-term, owning patents can be important. Patents are a powerful deterrent, even to large companies. Large companies that sue smaller companies often find themselves “upside down” when an infringement counter-suit is filed, because the small patent owner is eligible to collect damages on a much larger royalty base. Your patents may also be an important asset even if your product offerings fail to win in the marketplace.

Contact Your Congressional Representatives: Despite Congress’ recent passage of the America Invents Act, debate continues over the efficacy of America’s patent system. If you believe that the patent system requires further adjustment, speak with your congressional representatives. At least some members of Congress have expressed interest in implementing additional reforms to the patent system.

Orion Armon is a partner in the Intellectual Property Litigation practice group and a member of Cooley’s Litigation department. He joined the Firm in 2003 and is resident in the Colorado office. Cooley LLP is an international law firm for the converging worlds of technology, finance and high-stakes litigation. The Firm’s business and litigation practices reach across a broad array of dynamic industry sectors, including technology, life sciences, clean tech, real estate, financial services, retail and energy. With 650 attorneys throughout the United States and in Shanghai, Cooley has the range and expertise to help companies of all sizes seize opportunities and secure their successes around the world.